Jordan’s telecom industry feeling the pain of increased taxes

Revenues of the country’s telecom sector have dropped by 9 per cent since the government increased taxes on cellular phones and mobile subscriptions, a representative of the sector said on Sunday.

Umniah CEO Ihab Hinnawi said a study conducted by the country’s mobile operators showed that since the extra tax was imposed on mobile calls and services, revenues dropped by 9 per cent, while profits declined by between 30 per cent and 40 per cent.

In July last year, the government increased the special tax imposed on mobile phones from 8 per cent to 16 per cent, and the tax on mobile subscriptions — both prepaid and post-paid — from 12 per cent to 24 per cent.

This decision was criticised by the three mobile operators in the Kingdom, who said at the time that it would affect revenues.

According to Hinnawi, the government formed a committee last month to study the impact of this decision on the sector and requested that industry representatives prepare a study showing the gap in revenues.

The three telecom operators — Umniah, Zain Jordan and Orange Jordan — said they paid about JD40.5 million in income tax, JD40.4 million in revenue-sharing fees and JD18.4 million in frequency fees in 2012.

The telecom sector contributes 14 per cent to the gross domestic product annually and employs more than 60,000 persons.

Hinnawi made the remarks at a press conference on Sunday, where Umniah, which has a 32 per cent share of the Jordanian market, announced an agreement with Wataniya Palestine to provide calling and mobile roaming services to customers of the two companies.

The partnership, he said, will give Umniah subscribers the opportunity to connect with individuals subscribed to Wataniya Palestine at competitive prices.

Hinnawi explained that customers can receive calls at no charge and make calls at affordable rates while roaming in Palestine.

Fayez Husseini, the CEO of Wataniya Mobile, said the market share of his company in the West Bank is 35 per cent, and the company will soon enter the Gaza market.